# Pennon Group (PNN.LSE)

Canonical: https://gigainvestors.com/s/PNN.LSE

Analysis as of: 2026-10-16T07:40:23.012Z. Financial observations: FY1997–FY2026.

Listing currency: GBX. Reporting currency: GBP.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: GBX 325.20 per share; close as of 2026-10-15.

## Checklist

### understandable: fail

- 2 revenue declines in the last 10 years (informational)

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 2

- Years with a net loss: 2

- Operating margin variation: 0.38×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.22×

- FY2018: 0.23×

- FY2019: 0.39×

- FY2020: 0.38×

- FY2021: 0.31×

- FY2022: 0.30×

- FY2023: 0.13×

- FY2024: 0.15×

- FY2025: 0.11×

- FY2026: 0.25×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 4.3%

- ROIC, second-lowest year: 2.1%

- Typical minus recent gross margin: -4.0 pp

- Typical gross margin (annual median): 67.3%

- Recent gross margin (lower of latest and 3-year median): 71.4%

- Years with nonpositive capital: 0

- Capital spending / revenue: 45.1%

- ROIC including acquisitions, ten-year median: -5.3%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 6.7%

- FY2018: 6.4%

- FY2019: 4.8%

- FY2020: 3.3%

- FY2021: 5.5%

- FY2022: 4.0%

- FY2023: 2.1%

- FY2024: 2.3%

- FY2025: 1.6%

- FY2026: 4.5%

### economics: fail

- owner earnings cash conversion below threshold

- incremental invested capital return below threshold

- Owner earnings / net income, 5-yr: -30.80×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: GBP -1.2B

- Net income, five-year total: GBP 40M

- Return on incremental invested capital: 1.9%

- Working capital / revenue, annual change: -0.3 pp

- Working capital / revenue, change between three-year averages: -3.0 pp

- Working capital / revenue, final three-year average: 13.2%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: -14.74×

- FY2023: -3,616.37×

- FY2024: 24.64×

- FY2025: 4.63×

- FY2026: -1.41×

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 6.4% vs 2.3%

- Per-share earnings: 0.79 to -0.03 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- five-year and ten-year diluted share growth both above threshold

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 8.5%

- Ordinary dilution, 5-year annual growth: 11.2%

- Market cap gain: GBP 1.1B

- Cumulative retained earnings: GBP -531M

- Diluted shares, 10-year annual growth: 8.5%

- Diluted shares, 5-year annual growth: 11.2%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value change: GBP -0.82

- Per-share value, starting three-year median: GBP 0.79

- Per-share value, ending three-year median: GBP -0.03

- Buybacks concentrated in cheaper years (correlation): 0.05

- Average buyback yield: 1.4%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: GBP 291M

- Cumulative net income, 10 years: GBP 923M

- ROIC, first three-year median: 6.4%

- ROIC, last three-year median: 2.3%

Chart: Earnings per share; fiscal year observations.

- FY2017: GBP 0.79

- FY2018: GBP 0.95

- FY2019: GBP 1.04

- FY2020: GBP 0.49

- FY2021: GBP 0.29

- FY2022: GBP 0.07

- FY2023: GBP 0.00

- FY2024: GBP -0.03

- FY2025: GBP -0.12

- FY2026: GBP 0.19

### accounting: pass

- Sloan accruals: -3.8%

- Receivables to sales index (DSRI): 0.94×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 0.7%

- Earnings backed by cash: Yes

- Operating cash / earnings: 4.11×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.18×

Chart: Sloan accruals; fiscal year observations.

- FY2017: -2.6%

- FY2018: -2.4%

- FY2019: -1.0%

- FY2020: -2.3%

- FY2021: -2.0%

- FY2022: -4.4%

- FY2023: -2.9%

- FY2024: -2.5%

- FY2025: -2.1%

- FY2026: -3.8%

## Holders

## Price story

Down 66% since Nov 2021 · "Pennon claws back some losses after 20% plunge on rights issue, reduced dividend" (finance.yahoo.com, Oct 2026) · sales +23.2%

Story as of 2026-10-16T10:00:11.444Z; price observation 2026-10-15.

### Sales · FY2025–2026

sales +23.2%; source https://filings.xbrl.org/213800V1CCTS41GWH423/2026-03-31/ESEF/GB/0/213800V1CCTS41GWH423-2026-03-31/reports/213800V1CCTS41GWH423-2026-03-31.xhtml; observed 2026-06-25.

- FY2017: GBP 1.4B 

- FY2018: GBP 1.4B 

- FY2019: GBP 633M 

- FY2020: GBP 637M 

- FY2021: GBP 624M 

- FY2022: GBP 792M 

- FY2023: GBP 797M 

- FY2024: GBP 907M 

- FY2025: GBP 1.0B 

- FY2026: GBP 1.3B 

### Gross margin · FY2026

gross margin 71.4%; source https://filings.xbrl.org/213800V1CCTS41GWH423/2026-03-31/ESEF/GB/0/213800V1CCTS41GWH423-2026-03-31/reports/213800V1CCTS41GWH423-2026-03-31.xhtml; observed 2026-06-25.

- FY2017: 64.8% 

- FY2018: 64.5% 

- FY2019: 68.5% 

- FY2020: 67.5% 

- FY2021: 66.0% 

- FY2022: 67.2% 

- FY2023: 63.6% 

- FY2024: 94.4% 

- FY2025: 95.0% 

- FY2026: 71.4% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in utilities regulated water; annual sales are GBP 1.3 billion.

- Source: https://filings.xbrl.org/213800V1CCTS41GWH423/2026-03-31/ESEF/GB/0/213800V1CCTS41GWH423-2026-03-31/reports/213800V1CCTS41GWH423-2026-03-31.xhtml (filed 2026-06-25); FY2026: revenue 1291400000; grossProfit 921600000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PNN.LSE: Pennon Group Plc provides water and wastewater services in the United Kingdom. The company operates through two segments, Water and Non-Household Retail. It is also involved in renewable energy generation activities, as well as provides water retail services. Pennon Group Plc was incorporated in 1989 and is based in Exeter, the United Kingdom.

### Why customers stay

Margins ranged from 71.4% to 95% during 2024–26; it earns 4.3% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-25); FY2024: grossProfit / revenue = 94.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-25); FY2025: grossProfit / revenue = 95%.

- Source: https://filings.xbrl.org/213800V1CCTS41GWH423/2026-03-31/ESEF/GB/0/213800V1CCTS41GWH423-2026-03-31/reports/213800V1CCTS41GWH423-2026-03-31.xhtml (filed 2026-06-25); FY2026: grossProfit / revenue = 71.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-25); 10-year return on capital observations [[2017,0.06725719953902405],[2018,0.06405131046326731],[2019,0.04757021219168366],[2020,0.033446361208833125],[2021,0.05494482546748894],[2022,0.04047185976011599],[2023,0.021388329979879276],[2024,0.023086337523936393],[2025,0.01624772819999258],[2026,0.04524796712786952]]; median 0.04285991344399276. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 10 of 10 years; bought back GBP 2.4 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-25); FY2018: growth capex 113773732.58281219; upkeep 277826267.4171878; owner earnings 115173732.58281219. Growth capex / owner earnings = 0.987844450565207.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-25); Dividend observations: [[2017,131600000],[2018,107800000],[2019,162000000],[2020,172600000],[2021,184300000],[2022,1590300000],[2023,101600000],[2024,111700000],[2025,126900000],[2026,133699999]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://filings.xbrl.org/213800V1CCTS41GWH423/2026-03-31/ESEF/GB/0/213800V1CCTS41GWH423-2026-03-31/reports/213800V1CCTS41GWH423-2026-03-31.xhtml (filed 2026-06-25); FY2026: cash repurchases 2400000 GBP.

### Are managers owners

Insiders own 3.6% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PNN.LSE SharesStats.PercentInsiders = 3.573 percentage points; cache date 2026-10-16.

### What the price says

The price is 1.2 times annual sales; cash earnings are negative.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-25); Closing price 325.2 GBX; reporting-to-trading FX 100; FY2026 annual sales per share 2.7371651667436763; price multiple 1.1880905250116152. FY2026 cash earnings/share -0.2725295780857224. Closing-price date 2026-10-15.

## Monthly share-price history (GBX per share)

- 2016-10: GBX 655.91 per share

- 2016-11: GBX 642.94 per share

- 2016-12: GBX 650.01 per share

- 2017-01: GBX 623.29 per share

- 2017-02: GBX 681.06 per share

- 2017-03: GBX 693.24 per share

- 2017-04: GBX 673.59 per share

- 2017-05: GBX 723.90 per share

- 2017-06: GBX 648.84 per share

- 2017-07: GBX 632.72 per share

- 2017-08: GBX 638.22 per share

- 2017-09: GBX 626.43 per share

- 2017-10: GBX 624.08 per share

- 2017-11: GBX 624.47 per share

- 2017-12: GBX 615.43 per share

- 2018-01: GBX 564.81 per share

- 2018-02: GBX 478.35 per share

- 2018-03: GBX 505.71 per share

- 2018-04: GBX 544.06 per share

- 2018-05: GBX 586.98 per share

- 2018-06: GBX 624.39 per share

- 2018-07: GBX 590.59 per share

- 2018-08: GBX 604.11 per share

- 2018-09: GBX 560.57 per share

- 2018-10: GBX 586.51 per share

- 2018-11: GBX 565.91 per share

- 2018-12: GBX 544.53 per share

- 2019-01: GBX 599.55 per share

- 2019-02: GBX 611.50 per share

- 2019-03: GBX 584.46 per share

- 2019-04: GBX 588.39 per share

- 2019-05: GBX 576.45 per share

- 2019-06: GBX 583.83 per share

- 2019-07: GBX 563.71 per share

- 2019-08: GBX 593.58 per share

- 2019-09: GBX 650.01 per share

- 2019-10: GBX 705.98 per share

- 2019-11: GBX 716.82 per share

- 2019-12: GBX 805.64 per share

- 2020-01: GBX 871.27 per share

- 2020-02: GBX 847.30 per share

- 2020-03: GBX 853.19 per share

- 2020-04: GBX 861.45 per share

- 2020-05: GBX 896.03 per share

- 2020-06: GBX 879.52 per share

- 2020-07: GBX 837.47 per share

- 2020-08: GBX 790.71 per share

- 2020-09: GBX 810.36 per share

- 2020-10: GBX 780.17 per share

- 2020-11: GBX 743.39 per share

- 2020-12: GBX 746.69 per share

- 2021-01: GBX 734.74 per share

- 2021-02: GBX 686.96 per share

- 2021-03: GBX 766.34 per share

- 2021-04: GBX 812.71 per share

- 2021-05: GBX 830.79 per share

- 2021-06: GBX 892.49 per share

- 2021-07: GBX 1,004.50 per share

- 2021-08: GBX 980.92 per share

- 2021-09: GBX 890.53 per share

- 2021-10: GBX 916.47 per share

- 2021-11: GBX 962.84 per share

- 2021-12: GBX 917.25 per share

- 2022-01: GBX 851.23 per share

- 2022-02: GBX 817.43 per share

- 2022-03: GBX 844.94 per share

- 2022-04: GBX 874.02 per share

- 2022-05: GBX 786.78 per share

- 2022-06: GBX 748.66 per share

- 2022-07: GBX 789.14 per share

- 2022-08: GBX 734.12 per share

- 2022-09: GBX 618.57 per share

- 2022-10: GBX 658.27 per share

- 2022-11: GBX 719.97 per share

- 2022-12: GBX 698.35 per share

- 2023-01: GBX 721.15 per share

- 2023-02: GBX 648.44 per share

- 2023-03: GBX 686.96 per share

- 2023-04: GBX 675.95 per share

- 2023-05: GBX 607.96 per share

- 2023-06: GBX 558.84 per share

- 2023-07: GBX 552.55 per share

- 2023-08: GBX 506.96 per share

- 2023-09: GBX 460.59 per share

- 2023-10: GBX 571.02 per share

- 2023-11: GBX 555.70 per share

- 2023-12: GBX 590.67 per share

- 2024-01: GBX 554.91 per share

- 2024-02: GBX 519.93 per share

- 2024-03: GBX 508.93 per share

- 2024-04: GBX 523.08 per share

- 2024-05: GBX 488.89 per share

- 2024-06: GBX 450.77 per share

- 2024-07: GBX 487.31 per share

- 2024-08: GBX 474.35 per share

- 2024-09: GBX 465.31 per share

- 2024-10: GBX 427.97 per share

- 2024-11: GBX 473.95 per share

- 2024-12: GBX 466.49 per share

- 2025-01: GBX 454.30 per share

- 2025-02: GBX 418.80 per share

- 2025-03: GBX 448.00 per share

- 2025-04: GBX 501.00 per share

- 2025-05: GBX 509.00 per share

- 2025-06: GBX 501.50 per share

- 2025-07: GBX 498.40 per share

- 2025-08: GBX 473.60 per share

- 2025-09: GBX 467.60 per share

- 2025-10: GBX 518.50 per share

- 2025-11: GBX 551.50 per share

- 2025-12: GBX 527.50 per share

- 2026-01: GBX 546.50 per share

- 2026-02: GBX 600.00 per share

- 2026-03: GBX 529.50 per share

- 2026-04: GBX 549.50 per share

- 2026-05: GBX 516.00 per share

- 2026-06: GBX 465.80 per share

- 2026-07: GBX 463.00 per share

- 2026-08: GBX 479.00 per share

- 2026-09: GBX 458.00 per share

- 2026-10: GBX 325.20 per share

## Annual estimated value (GBX per share)

- FY2017: low GBX 619.98 per share, central GBX 734.67 per share, high GBX 812.19 per share

- FY2018: low GBX 728.75 per share, central GBX 791.96 per share, high GBX 876.09 per share

- FY2019: low GBX 376.42 per share, central GBX 393.84 per share, high GBX 417.02 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original ESEF filing](https://filings.xbrl.org/213800V1CCTS41GWH423/2026-03-31/ESEF/GB/0/213800V1CCTS41GWH423-2026-03-31/reports/213800V1CCTS41GWH423-2026-03-31.xhtml); period 2026-03-31, filed 2026-06-25.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.